On 2013-08-15, at 10:24 PM, Jim Devine wrote: > The US isn't that different. There's lots of money that could be lent which > isn't. That isn't the cause of the stagnation as much as an effect, one that > has blocked the effects of QE. > > On Aug 15, 2013 6:09 PM, "Anthony D'Costa" <[email protected]> wrote: > Japan is in a different league. Depressed demand was not due to lack of > liquidity. It had enough savings and interest rate was zero or less. So QE > was pretty useless.
In fact, Krugman had an interesting post on his blog a couple of days ago skewering Allan Meltzer and referring to the similarity of the Japanese and American experiences with QE : "...it’s exactly what those of us who had analyzed the liquidity trap predicted would happen when you expand the monetary base in an economy at the zero lower bound...under liquidity trap conditions, the normal expectation is that an increase in high-powered money will have little effect on broad aggregates ….Consider, in particular, the case of Japan’s quantitative easing in the early 2000s...Unlike the Fed, the Bank of Japan didn’t pay interest on reserves. Nonetheless, a huge increase in the monetary base just sat there, mostly in the form of increased bank reserves – the same as what happened in America later." See: http://krugman.blogs.nytimes.com/2013/08/14/hawks-doves-and-ostriches/?_r=0 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
